EMES, PXD, and TSO have all pulled back to historically supportive trendlines
Oil prices have struggled, as concerns over a domestic supply glut overshadow optimism toward the Organization of the Petroleum Exporting Countries' (OPEC) output cuts. The decline in crude futures has weighed on energy shares, with just 13% of the 30 stocks we track under our "oil service" umbrella trading north of their 80-day moving average. However, not all hope is lost. Not only did shares of crude snap their seven-session losing streak yesterday on a surprise U.S. inventories drop, but a number of oil stocks have recently pulled back to historically supportive moving averages, per data from Schaeffer's Senior Quantitative Analyst Rocky White. Among them are
Emerge Energy Services LP (NYSE:EMES),
Pioneer Natural Resources (NYSE:PXD), and
Tesoro Corporation (NYSE:TSO).
Emerge Energy Stock Could Find Support from Short Sellers
Southlake, Texas-based EMES mines, produces, and distributes silica sand for use in hydraulic fracking. The stock has surged 157% year-over-year, and topped out at an annual high of $24.45 on Feb. 23. The shares were last seen trading at $13.42, following a recent pullback to their 160-day moving average -- a potentially bullish signal, if history is any guide. While the sample size is small, after EMES retreated to this trendline last November, the stock went on to gain 20% over the next 21 trading days.
Another big bounce from here would likely have more short sellers jumping ship. After topping out at an all-time peak in mid-February, short interest declined 20% in the most recent reporting period. Nevertheless, roughly 11% of Emerge Energy Services LP's float is still sold short. It would take nearly three days to cover these remaining bearish bets, at the stock's average pace of trading, meaning there's still some sideline cash available to help fuel a potential rebound.
Pioneer Natural Resources Shares Could See Near-Term Gains
PXD is an oil-and-gas exploration company based in Irving, Texas. The shares have added nearly 34% in the past 12 months, guided higher by their 160-day moving average. After notching a two-year high of $199.83 on Feb. 14, PXD retreated to this rising trendline -- most recently seen trading at $184.25 -- a move that could translate into near-term gains for the shares, if past is prologue. Specifically, in the four other times this signal has sounded in the last three years, PXD stock has averaged a 21-day return of 4.7%, and has been positive two-thirds of the time.
Options traders, meanwhile, have been buying to open puts over calls at an annual-high clip in recent weeks, per PXD's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 3.85. The bulk of the action has centered at the March 177.50 put, meaning buyers expect Pioneer Natural Resources stock to settle south of $177.50 at tomorrow's close, when the front-month options expire.
Is Tesoro Stock Flashing a Potential "Buy" Signal?
Petroleum refining firm TSO operates out of San Antonio, Texas. While the stock has tacked on 16.4% over the past nine months, it has struggled of late -- currently down 2.2% year-to-date at $85.48. Nevertheless, the shares are trading near their 160-day moving average, a "buy" signal more often than not in the past three years. In fact, in the nine other times TSO has pulled back to this trendline, the stock has gained 9.4%, on average, in the subsequent 21-day period, and has been positive 88% of the time.
Short sellers have been upping the bearish ante toward the oil stock. Short interest surged 18.2% in the two most recent reporting periods to 10.5 million shares -- the most since early 2015. It would take roughly a week to cover these shorted shares, at Tesoro Corporation's average pace of trading. Another big bounce from the 160-day moving average could shake some of the weaker bearish hands loose.
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